Bangkok--6 May--Standard & Poor's
Standard & Poor's Ratings Services raised its underlying rating (SPUR) on Brea Public Financing Authority, Calif.'s series 1998 water revenue bonds, issued on behalf of Brea, to 'AA-' from 'A+'. The rating action reflects our view of the city's implementation of a new rate schedule which allows for automatic rate adjustments to account for increases in its wholesaler supplier costs. We believe this new rate adjustment, along with regular usage rate increases over the next five years, will allow the city to maintain strong finances going forward.
At the same time, Standard & Poor's assigned its 'AA-' long-term rating, with a stable outlook, to Brea Public Financing Authority's series 2009 water revenue bonds.
The ratings reflect our view of the water utility's role as a distributor of treated wholesale water to a diverse customer base within Orange County, good historical financial performance, projected strong coverage of total annual debt service (ADS) of at least 1.7x, and a manageable capital improvement plan with no plans for additional debt.
The net revenues of the water utility secure the bonds.
"We expect the city will maintain strong coverage of ADS going forward," said Standard & Poor's credit analyst Le Quach. "We also expect that capital needs will remain minimal, and improvements will be sufficiently funded through current bond proceeds and rate increases."
Brea is a built-out, mainly residential community located 25 miles southeast of downtown Los Angeles in Northern Orange County. It provides imported water service to about 12,000 customers and receives about half of its water supply from Municipal Water District of Orange County and the other half from California Domestic Water Company.
RELATED RESEARCH
"Standard & Poor's Revises Criteria For Rating Water, Sewer, And Drainage Utility Revenue Bonds," Sept. 15, 2008
Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Le T Quach, San Francisco (1) 415- 371-5013
Chris Morgan, San Francisco (1) 415-371-5032